Judicial recovery plan for Methodist Education is approved by the Justice

The Methodist group’s judicial recovery plan was approved last Saturday (3) by Judge Gilberto Schäfer, of the 2nd Court of the Regional Business Court of Porto Alegre.

Facing a series of financial difficulties since 2015, the century-old education group filed for bankruptcy in early 2021. The institution has a debt of around R$ 500 million.

In May of that year, the recovery request was approved by the judge. He understood that the institution has conditions to recover financially within the restructuring process.

The process involves 16 units of the conglomerate. Among them, the Methodist Institute of Higher Education, in São Bernardo do Campo (SP), and the General Council of Methodist Institutions of Education.

It also included Methodist churches, which had their assets protected from creditors by court order. It was the first time that a church was protected in a judicial reorganization (RJ).

The churches are not in recovery, that is, they do not need to be accountable to the trustee and the judge, but they are part of the RJ, as they are providers of resources that will be used to pay creditors.

The main source of funds to honor the payment of liabilities will come from the sale of real estate assets. The payment period will depend on the completion of these transactions. Some of them have already been done.

According to the plan, 100% of labor claims, 95.2% of class 3 creditors (unsecured) and 83.5% of class 4 creditors (micro and small companies) will receive their credits in full. Those with a real guarantee (class 2) will have a 30% discount — the initial forecast was a 70% discount. It was also proposed to maintain the current 2,300 jobs.

“The idea is to dispose of the assets belonging to both educational institutions and churches, which belong to the same economic group, but to the extent necessary to ensure that the educational heritage is also maintained”, says lawyer Luiz Roberto Ayoub, partner from Galdino & Coelho, Pimenta, Takemi, Ayoub Advogados, who is in charge of the case.

According to the lawyer, the group is also carrying out a tax transaction process with the National Treasury Attorney’s Office, which should be concluded shortly.

According to the court, the trustee will present monthly reports on the activities of the debtors and the follow-up report on compliance with the plan. The fixed inspection period is two years.

According to Methodist, since 2019, the activities of five schools have been closed, 88 courses in higher education units have been closed and a 30% reduction in the staff.

The crisis of Methodist educational institutions began with the change in the rules of the Student Financing Fund (Fies) and was accentuated with the economic scenario of recession in recent years. The Covid-19 pandemic has worsened the institution’s situation.

X-RAY

Methodist Education

Beginning of activities in Brazil: 1881
Employees: 2,300
Students: 15.5 thousand
Teaching network: 11 colleges, 6 higher education institutions
Regions in which it operates: Rio Grande do Sul, São Paulo and Minas Gerais